Also found in: Dictionary.
Related to money-market fund: Money market mutual funds
money-market fund,type of mutual fundmutual fund,
in finance, investment company or trust that has a very fluid capital stock. It is unique in that at any time it can sell or redeem any of its outstanding shares at net asset value (i.e.
..... Click the link for more information. that invests in high-yielding, short-term money-market instruments, such as U.S. government securities, commercial papercommercial paper,
type of short-term negotiable instrument, usually an unsecured promissory note, that calls for the payment of money at a specified date. Because it is not backed by collateral, commercial paper is usually issued by major firms whose credit-rating is so good
..... Click the link for more information. , and certificates of deposit. Returns of money-market funds usually parallel the movement of short-term interest rates. Some funds buy only U.S. government securities, such as Treasury bills, while general-purpose funds invest in various types of short-term paper. They became enormously popular with investors in the early 1980s because of their high yields, relative safety, and high liquidity. Investment in money-market funds soared from $20 billion in the late 1970s to over $150 billion in the early 1980s. Much of the growth came at the expense of banks and thrift institutions. With the recession of the late 1980s and early 1990s, interest rates (and, temporarily, the popularity of the funds) dropped. By 2008, some $3.5 trillion was invested in U.S. money-market funds when concerns about real and potential investment losses as a result of the global financial crisis led to sizable withdrawals from the funds; as a result, the Treasury dept. temporarily guaranteed the funds against losses.